We return to Denise, our hopeful millionaire from Chapter 4 (Example 4.3) and this chapter (Example 5.2). In Chapter 4, Denise was putting away $5,000 per year at the end of each year at 6% interest, with the expectation that in forty-four years she would be a millionaire. If Denise switches to a monthly savings plan and puts one-twelfth of the $5,000 away each month ($416.66), how much will she have in forty-four years at the 6% APR? Why is it more than the $1,000,000 goal? In this chapter, Denise was putting away $546.23 for thirty years at 9% to become a millionaire. Why does it take more per month when she is putting money away at 9% than when she was earning a lower rate of 6% over the forty-four years?
Answer to relevant QuestionsMoulton Motors is advertising the following deal on a new Honda Civic: “Monthly Payments of $400.40 for the next 60 months and this beauty can be yours!” The sticker price of the car is $18,000. If you bought the car, ...From 1991 to 2000, the U.S. economy had an annual inflation rate of around 2.93%. The historical annual nominal risk-free rate for this same period was around 5.02%. What is the real interest rate using the approximate ...Michael is shopping for a special automobile. He finds the exact car he wants, a 1966 dark blue Pontiac GTO. This car is currently the property of a neighbor, so in order to buy the car for the agreed-upon price of $35,000; ...What is a bond? What determines the price of this financial asset?What is the yield of the above bonds if interest (coupon) is paidsemiannually?
Post your question